Motorola Solutions expects growth in government business to moderate

A man walks by a video display at the Motorola booth on the second day of the Consumer Electronics Show (CES) in Las Vegas January 7, 2011.

Reuters/Rick Wilking

(Reuters) - Communications gear maker Motorola Solutions Inc forecast current-quarter revenue below analysts' estimates, and said it expected growth in its government business to moderate in 2013 after the end of an upgrade program for two-way radios.

Government business is expected to grow in the "low- to mid-single digits," Chief Executive Greg Brown told Reuters.

Shares of the Schaumburg, Illinois-based company fell 3 percent to $56.34 in morning trading on Wednesday. They later recouped some losses to be down 2.4 percent at $56.87.

Motorola Solutions' government business grew 12 percent in 2012, accounting for 69 percent of total revenue.

The company benefited over the past year as two-way radio users were required by the Federal Communications Commission to upgrade their devices for a switch to narrow bands of 12.5 kHz from wideband channels of 25 kHz by January 1.

Motorola Solutions dominates the two-way radio market with its land-mobile-radio systems and public-safety products, and the U.S. government is its largest customer.

Brown expects "some of the narrow-banding revenue to continue in 2013," as large cities such as New York, Philadelphia and Chicago have been given extensions. However, he added that the revenue "will not be as strong as last year".

The company forecast earnings of between 62 cents and 67 cents per share from continuing operations in the first quarter of 2013, largely below analysts' average estimate of 67 cents per share.

It expects first-quarter revenue to increase 4 percent to 5 percent from a year earlier, or revenue of between $2.03 billion and $2.05 billion.

Analysts are expecting revenue of $2.07 billion, according to Thomson Reuters I/B/E/S.

Net income from continuing operations rose to $336 million, or $1.18 per share, in the fourth quarter, from $177 million, or 54 cents per share, a year earlier.

Excluding items, the company earned $1.10 per share from continuing operations, above analysts' expectations of $1.02.